Has Digital Inclusive Finance Alleviated Vulnerability to Poverty in Rural China?

Digital inclusive finance (DIF) is an emerging alleviator of poverty in developing countries, yet household-level evidence is still limited. This article empirically investigates this issue through micro econometric analysis using the China Family Panel Survey (2014-2020) as well as the Digital Inclusive Finance Index published annually by Peking University. The empirical analysis employs panel data fixed effects model and mediation model to identify both the overall impact of DIF and possible mechanisms of how it helps reduce rural households' vulnerability to poverty. Empirical results confirm the positive role DIF plays, which is statistically significant and robust across alternative poverty lines. Heterogeneous impacts are found across demographic and socioeconomic characteristics. Mediation analysis further reveals that DIF is positively associated with physical, social, human, financial, and natural capital, all of which in turn can reduce vulnerability to poverty. These findings point to the importance of promoting DIF participation among rural residents and alleviating their vulnerability to poverty through multidimensional livelihood capital improvements.